The Dallas Federal Reserve reported that its business activity index plunged to -13.2 in July from 5.8 in June, well below consensus expectations for a slight decline to 2.5.
The new orders index was positive for the second month in a row, although it moved down from 7.9 to 1.4. Similarly, the shipments index posted its second consecutive positive reading but edged down from 9.6 to 7.4. The general business activity plummeted to -13.2 after climbing into positive territory in June. Nearly 30 percent of manufacturers noted a worsening in the level of business activity in July, pushing the index to its lowest reading in 10 months. The company outlook index remained positive for the third month in a row but fell from 5.5 to 1.6.
The following graph from Calculated Risk displays a composite of all Federal Reserve survey data along with the national PMI.
The significant economic weakness signified by the sharp decline in the displayed manufacturing data trends continues to develop as expected in March, with the deterioration accelerating during the last several weeks. It remains likely that the economy is entering a recession, the start of which should eventually be dated somewhere in the May to July time frame.